TPG stays light to drive growth

Singapore

WHEN TPG Singapore first won the licence to form Singapore's fourth telco, in December 2016, the country's mobile penetration rate was 149.8 per cent. As at May last year, that penetration rate had barely budged at 149.9 per cent.

Competition in Singapore's telecoms market has become a zero-sum game, with the 4 mobile network operators (MNOs) and numerous mobile virtual network operators (MVNOs) engaging in price wars to lure customers away from their competitors.

TPG Singapore is among those competing heavily on price, with rates among the lowest in the industry.

For S$10 a month, users get 50GB of local data and 1GB of roaming data in several countries; among them, Germany, Malaysia and the United States. Users also get unlimited calls to local mobile numbers and 300 minutes to local fixed lines. And, as part of an ongoing promotion, they are getting an additional 50GB of data until further notice.

The company has also recently created a business plan targeting small and medium-sized enterprises. This plan is similar to the one offered to retail consumers, except users get more local fixed line minutes and more SMSes to other telcos' numbers for just S$8.

TPG Singapore's chief executive officer Richard Tan said the MNO is able to offer such prices because it has an edge over its competitors - due to its strong engineering roots and its lack of legacy hardware to maintain.

Unlike the incumbents in the market, TPG Singapore does not need to maintain older network infrastructure for technologies such as 3G.

"We started with a clean slate. As an example, we are very precise in terms of our planning so that our base station placement will be more optimised ... we ensure that there's as little wastage as possible," Tan said.

Tan, an electrical engineer, is well versed in TPG Singapore's infrastructure set-up. He does not shy from going on-site to assist his team in dealing with technical challenges, such as the installation of TPG Singapore's underground coverage along MRT lines. But he does not lose sight of operational metrics either.

In a bid to lower costs, Tan said, TPG Singapore has minimised its network of stores in favour of an online approach. Cost savings have been passed on to users who are "data hungry", he added.

Modest figures

For all that, TPG Singapore's user growth has been modest. It launched commercial services on Mar 31, 2020. As at Jul 31, 2021, its user base has reached 392,000 - giving it a 4.5 per cent market share at the time.

The hesitance of consumers to switch to TPG Singapore could come from user perceptions that the company has slower 4G speeds and poorer coverage in tunnels. The company only achieved full coverage in tunnels in October last year.

According to data from mobile analytics company Opensignal, collected between Aug 1 and Oct 29, TPG Singapore's average download speed was lowest among the 4 MNOs at 18.6 megabits per second. StarHub led the pack with an average speed of 65.3 megabits per second, while M1 was third at 40.7 megabits per second.

Profit-wise, however, the situation for TPG Singapore is respectable. The company's earnings before interest, taxes, depreciation and amortisation was positive at S$0.9 million for the 12 months ended Jul 31, 2021.

For the financial period of Mar 11, 2020, to Jul 31, 2021, following its demerger from parent company TPG Telecom, the company's revenue stood at S$34.3 million and its net loss stood at S$32.6 million.

The average revenue per user (ARPU) of the company over the 12 months ended Jul 31, 2021 stood at S$9.43 per month.

TPG Singapore has been trading on ASX as Tuas, after its parent company merged with Vodafone Hutchison Australia. Shares of Tuas closed at A$1.68 on Friday (Feb 4), down 1.2 per cent or A$0.02. The company has a market capitalisation of A$779.4 million (S$741.7 million).

TPG Telecom's founder David Teoh remains the executive chairman of Tuas and a director of TPG Singapore.

Growth drivers

In order to increase ARPUs, TPG Singapore is looking at introducing incremental service packs. The company will also look to drive higher data usage through the expansion of its 5G network.

TPG Singapore was able to snag 2 paired lots of 2.1 GHz spectrum in November last year, after it lost out to the incumbent telcos in the 3.5 GHz spectrum auction in 2020. It also has mmWave spectrum holdings that can deliver fast speeds, but at a much shorter range.

While analysts have suggested that the 2 paired lots of 2.1 GHz of spectrum will not be enough to deliver speeds much faster than its existing 4G network, Tan remains confident that the company will be able to make the most of the spectrum that the company has.

He has not ruled out leasing capacity from other telcos on their networks as well. The company will spend approximately S$40 million in capital expenditure in its FY2022, although it did not say how much it would spend to build out its 5G network.

"We will always do what we believe is right for our customers, our shareholders and the company to deliver the best optimised service," Tan said. "The market is very dynamic and the industry is always changing so whenever there's an opportunity for us to optimise all the parameters and the tools that we have, it is on me and my team to do so."